First, I refer to my declaration in the Register of Members’ Financial Interests: I own one property which I let out.
The Select Committee carried out pre-legislative scrutiny, and we unanimously warmly welcomed the principle behind this Bill. The principle we accepted was that the contract is between a landlord and a letting agent, and therefore it is up to the landlord to pay the cost of that contract; that seems a very simple principle to adopt. Evidence was given to the Select Committee that considerable savings to tenants could materialise from this; there was talk about average fees charged to tenants of £100 or £200, but Shelter gave evidence that they could be as high as £300 or £400 in some cases, so there are significant savings for tenants here.
There could in some circumstances be an increase in rents to compensate, and that would be legitimate if done properly from the beginning, but again there was evidence that if tenants were asked to pay a bit more each month, rather than a lump sum fee, that would help them in most cases. Organisations representing tenants generally accepted that point.
The Select Committee looked at the Bill and recognised that the good letting agents would accept it and willingly comply. The Bill tries to deal with those letting agents that would try to find loopholes to get around the provisions. We concentrated to a degree on default fees and how letting agents might seek to recover money they can no longer charge through charging extra for things that happen during a tenancy such as a lost key. It is reasonable that a lost key should be charged for, but it ought to be a reasonable charge. Letting agents might also charge more if they could in the first month of a tenancy to disguise an upfront fee, or indeed try to recover money in that way at the end of a tenancy. These were the sorts of matters we considered and made recommendations on.
I will not go into all the areas where the Government accepted our recommendations, because there is quite a long list of them, but I think the Minister will accept that the Bill is better for the consideration of the Select Committee and its suggestions. For example, section 21 notices cannot be used where the letting agent has kept outstanding prohibitive fees; that was a Committee suggestion. I am however disappointed that the Government did not accept our suggestion that we should have a clause about retaliatory evictions not being allowed as a result of this legislation. Indeed, the Committee looked at the issue of retaliatory evictions in our recent report on the private rented sector in general, and I think the Government must now review the legislation on retaliatory evictions and the Deregulation Act 2015, as it is not working at present. The Government are going to come back with some more information on how many cases there have been where a retaliatory eviction has been stopped because of the current legislation. This point might also apply to the private Member’s Bill of my hon. Friend Ms Buck; I can see retaliatory evictions coming into that as well. Therefore, we must extend the scope not just in terms of this legislation, but in terms of other Bills as well.
We did a lot of work on default fees. We need some specific figures on this, and my understanding is that the Government have generally accepted that default fees should only be related to the cost incurred by the landlord, and that more information will be provided in the guidance the Government issue. The problem is that the guidance will not be available to this House as the Select Committee suggested; it will not be available until consideration in the House of Lords. We are therefore taking the Government’s word that they are going to toughen the default fees powers without seeing that in practice.
Another important issue is enforcement. The Government have accepted the principle of the Select Committee suggestion that a tenant charged prohibitive fees should be able to recover them from the first-tier tribunal. That is the best place to go because it is fairly user-friendly for tenants, although they will often still need some help from advice services or local authorities. The problem is that if a letting agent does not agree to the first-tier tribunal decision the tenant has to go to the county court for enforcement, and that is not a user-friendly place, which might deter tenants from going. We have suggested that the first-tier tribunal might be given powers of enforcement or at least might have to take the case on behalf of the tenant to the county court if its decision is not being complied with. Will the Government look at that? It would also be nice to have a bit more information about their idea of a housing court reform and generally having one place where tenants can go for a whole range of housing issues. That is a good suggestion, but we have not seen any details so far; it would be good if the Government were to come back with some.
On local authority enforcement, we suggested that paying the costs the local authority will incur through civil penalties was not sufficient and that local authorities need extra funding from Government. They have accepted that in principle, but have committed only to doing that for the first year that the scheme is in effect and have not given any idea of the amount of money. We will need to look at that in more detail.
Finally, we talked about the size of security deposits. We heard conflicting evidence: organisations representing tenants wanted deposits equivalent to four weeks’ rent; landlords and letting agents wanted six weeks. Both made compelling cases, so the Committee suggested five weeks. We also heard some interesting ideas about alternatives to security deposits. We were not convinced that any had been sufficiently thought through to recommend them, but we felt that many of them needed further thought. Will Ministers therefore commit to carrying out a review of the various alternatives to security deposits and report back to the House in due course?